The MSCI Emerging Markets Index lost 2.6 percent to 912.47
by 5:30 p.m. in New York, the steepest decline since Nov. 23.
Brazil’s Bovespa stock index dropped for a second day, pushed
lower by beef producer JBS SA and Banco Bradesco SA, the
country’s second-biggest bank by market value. China Pacific
Insurance (Group) Co. tumbled by a record in Hong Kong as funds
controlled by Carlyle Group LP sought to sell shares in the
company.

Spanish borrowing costs surged to a record high on
speculation more of the country’s regional governments will
follow Valencia in seeking a bailout, increasing concern the
debt crisis in Europe is deepening. The 21 countries in the MSCI
emerging market index send about 30 percent of their exports to
the European Union on average, data compiled by the World Trade
Organization show. China’s expansion may cool to 7.4 percent
this quarter, said Song Guoqing, an academic member of the
People’s Bank of China monetary-policy committee.

“People are moving again to risk-off mode due to the
increasing Spain borrowing costs, which is a bad sign for
everybody,” said Zoltan Koch at Hamburg-based Warburg Invest,
which manages the equivalent of about $14.5 billion of assets.
“People are just selling risky assets without thinking of
direct effect of Spanish bond yields on emerging market
fundamentals.”

Volatility Soars

The IShares MSCI Emerging Markets Index exchange-traded
fund, the ETF tracking developing-nation shares, lost 2.6
percent, the most in a month. The Chicago Board Options Exchange
Emerging Markets ETF Volatility Index, a measure of options
prices on the fund and expectations of price swings, soared 15
percent, the biggest climb since Nov. 25.

Spain’s bonds slumped, sending 10-year yields to a euro-era
high. Yields on the securities rose 23 basis points, or 0.23
percentage point, to 7.50 percent after climbing to as much as
7.565 percent, the highest since November 1996.

All 10 industry groups on the MSCI Emerging Markets index
dropped today, with financial, materials and energy companies
being the biggest drag. The Shanghai Composite Index sank 1.3
percent to the lowest close since March 2009. The BSE India
Sensitive 30 Index lost 1.6 percent. The Hang Seng China
Enterprises Index of mainland companies listed in Hong Kong lost
3.1 percent, the most in two months.

Ruble Slumps

The MSCI developing-nation gauge has lost 0.4 percent this
year, compared with a 2.5 percent advance in the MSCI World
Index. Shares in the emerging-markets index are trading at 9.9
times estimated earnings, compared with the MSCI World’s
multiple of 12.2, according to data compiled by Bloomberg.

Russia’s ruble and the South African rand led currencies
lower. The ruble tumbled 1.8 percent against the dollar while
the rand fell 2 percent. The yuan slid to its weakest in nine
months.

China’s economic growth slowed to 7.6 percent in the three
months ended June, the sixth straight deceleration, as Europe’s
fiscal crisis sapped exports and a crackdown on property
speculation curbed domestic demand. Premier Wen Jiabao said the
momentum for a recovery isn’t yet in place, according to a July
15 Xinhua News Agency report, and warned two days later that the
labor situation will become more “severe.”

Jiangxi Copper, China Pacific

China Pacific Insurance tumbled 10 percent as Carlyle
Holdings Mauritius Ltd. and Parallel Investors Holdings Ltd.
offered 220 million shares in the Chinese insurer for HK$25.50
($3.29) to HK$26 apiece. The price represents a discount of as
much as 5.2 percent to the stock’s closing price on July 20.

Maruti Suzuki India Ltd., the country’s largest carmaker,
fell 5.9 percent to a one-month low after saying it’s locking
out a factory near New Delhi, pending the conclusion of a probe
into a deadly riot last week. Company Chairman R.C. Bhargava on
July 21 ruled out an early resumption of the factory, which
accounts for about 40 percent of the company’s manufacturing
capacity, though he didn’t give an estimate as to how long the
stoppage will last.

PTT Exploration & Production Pcl tumbled 4.8 percent in
Bangkok, the most in two months, after saying it plans to raise
about 98 billion baht ($3.1 billion) in the nation’s biggest
equity offering to fund expansion.